GBP/USD Analysis: Stuck in a range near the lower end of a 4-month old ascending trend-channel
|The GBP/USD pair continued with its struggle to sustain/build on the momentum beyond the 1.3100 handle and met with some fresh supply on Thursday, shrugging off the latest Brexit development. The EU leaders granted the UK a second Brexit extension until Oct. 31 and also included a clause that allows Britain for an early exit should the UK Parliament approve a Withdrawal Agreement. The arrangement did offer some temporary relief but hasn't eliminated the risk of a no-deal Brexit. This coupled with the lack of progress in the UK cross-party talk - to break the Brexit deadlock, exerted some fresh downward pressure on the British Pound.
Adding to this, a goodish US Dollar recovery from near two-week lows further collaborated to the pair's intraday slide to mid-1.3000s. The attempted USD rebound was further supported by robust US economic data and a subsequent rise in the US Treasury yields though lacked any strong conviction amid firming expectations that the Fed would hold rates steady through 2019.
The pair now seems to have stabilized a bit and remained well within a familiar trading range, held since the beginning of this week. In absence of any major market moving economic releases from the UK, the incoming Brexit headlines and the USD price dynamics will continue to influence the pair's momentum. Later during the early North-American session, the release of Prelim UoM Consumer Sentiment from the US might further collaborate towards producing some meaningful trading opportunities on the last trading day of the week.
From a technical perspective, nothing seems to have changed much for the pair and any subsequent slide might continue to find decent support near the lower end of a four-month-old ascending trend-channel, around 1.3035-30 region. This is closely followed by the key 1.30 psychological mark and the very important 200-day SMA support near the 1.2975 region, which if broken might confirm a near-term bearish breakdown and turn the pair vulnerable to accelerate the slide further towards testing the 1.2900 round figure mark.
On the flip side, the 1.3100-1.3120 region now seems to have emerged as an immediate strong resistance, which if cleared decisively might trigger a short-covering move and lift the pair beyond the 1.3155-60 supply zone towards reclaiming the 1.3200 round figure mark.
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